Which threshold CANNOT be used to identify high-cost loans according to federal law?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $25.99Unlock all

Prepare for the Principal Lending Manager (PLM) Test. Access multiple choice questions and flashcards with detailed explanations and hints to enhance your learning experience and boost your confidence for test day.

Multiple Choice

Which threshold CANNOT be used to identify high-cost loans according to federal law?

Explanation:
High-cost loan status is defined by two triggers under federal law: an APR threshold relative to the market rate (APOR) and a threshold based on points and fees paid at closing. If the loan’s APR exceeds a specified margin above APOR, or if the points and fees surpass a set portion of the loan amount, the loan is considered high-cost and subject to extra protections. Private Mortgage Insurance (PMI) is not part of these triggers and is not used to identify high-cost loans, so a PMI threshold cannot be used for that purpose.

High-cost loan status is defined by two triggers under federal law: an APR threshold relative to the market rate (APOR) and a threshold based on points and fees paid at closing. If the loan’s APR exceeds a specified margin above APOR, or if the points and fees surpass a set portion of the loan amount, the loan is considered high-cost and subject to extra protections. Private Mortgage Insurance (PMI) is not part of these triggers and is not used to identify high-cost loans, so a PMI threshold cannot be used for that purpose.

More Multiple Choice Questions
Subscribe

Get the latest from Passetra

You can unsubscribe at any time. Read our privacy policy